News

DOL Okays RCH's Auto-Portability Program

NAPA Net's Ted Godbout covers breaking news that the US Department of Labor has granted final approval to Retirement Clearinghouse (RCH) for a Prohibited Transaction Exemption (PTE) for the RCH Auto Portability program. As Godbout states, "the RCH Program seeks to help eliminate duplicative fees and reduce retirement savings leakage by providing individuals who are changing jobs with a way to transfer retirement assets from their prior employers’ plans to their new employers’ plans." Godbout also references the DOL's Advisory Opinion 2018-01A, issued in November 2018, and cites EBRI research indicating that system-wide adoption of auto portability for "smaller accounts alone would save $1.5 trillion."

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401k Cashout Confusion: Who’s Doing It and Why?

In his five-part series in 401k Specialist, RCH's Tom Hawkins sheds light on the problem of cashout leakage, a silent crisis that unnecessarily robs millions of Americans of their retirement security. In his second article in the series, Hawkins examines the demographics of 401(k) cashout leakage, identifying those segments of the population most impacted by the problem, as well as those who stand to benefit the most from a solution.

Preparing Employees for Retirement, a Global Comparison

PLANSPONSOR's Amanda Umpierrez reports on the major findings from the 2019 Aegon Retirement Readiness Survey, which provided a comparative analysis of retirement readiness in countries around the world. Summarizing the key takeaways for employers, Umpierrez turns to Transamerica's Catherine Collison, who suggests "that the U.S. government can require employers to offer auto-enrollment in retirement plans......and can continue efforts to implement retirement plan auto-portability."

Also featured in PlanAdviser

What’s missing from the SECURE Act? A provision to plug cash-out leakage

In his latest article in Employee Benefit News, RCH President & CEO Spencer Williams identifies a key, missing element in pending retirement legislation: provisions to plug cash-out leakage. Citing both the SECURE Act of 2019 and the Automatic Retirement Plan Act of 2017 (ARPA), Williams applauds their commendable goals to expand coverage, but takes them to task for failing to incorporate provisions that plug leakage. To make his case, Williams cites two recent EBRI studies, both finding that auto portability – when combined with legislative proposals that expand access – vastly improves their public policy benefits by stemming leakage and by dramatically reducing the nation’s retirement savings shortfall.

5 Positive Retirement Plan Proposals Currently Circling Washington

401k Specialist Editor-In-Chief John Sullivan reports on EBRI's 7/11/19 analysis of DC legislative proposals, including mandatory coverage (auto-IRAs), immediate annuities, open MEPs and changes to required minimum distributions -- all of which deliver significant retirement public policy benefits, as measured by their simulated reduction in the retirement savings shortfall (RSS). Importantly, Sullivan singles out auto portability as providing the most-impressive benefits, noting: "if a full auto portability scenario is assumed on top of all of the aforementioned changes to the retirement system, the average retirement deficit is simulated to decrease by 27.1 percent."

P&I: EBRI Study Examines Legislative Proposals, Highlights Benefits of Auto Portability

Pensions & Investments' Hazel Bradford reports on the latest EBRI research to examine legislative proposals, including auto-IRAs, that would expand retirement plan coverage. The EBRI study, notes Bradford, finds that "along with mandating that employers with more than 10 workers provide access to auto IRAs and raising the IRS' auto-escalation cap to 15% from the current 10%, EBRI calculated that auto-portability of all defined contribution assets through a clearinghouse would reduce the retirement deficit by 27.1%." Bradford further quotes EBRI Director of Research Jack VanDerhei, who adds: "[w]ith that combination, we can take care of a quarter of the retirement deficit alone for that age cohort."

Legislative Proposals Could Help Retirement Income Adequacy: EBRI

In her 7/12/19 article, PLANSPONSOR's Rebecca Moore reports on the latest EBRI research to address legislative proposals that expand access to employer-sponsored retirement plans. Once again, the EBRI findings reveal the highly-beneficial, additive impact of auto portability, when considered in tandem with other policy initiatives. The EBRI analysis, which examined various scenarios involving the widespread adoption of auto-IRA programs, found that adding auto portability to the mix resulted in the youngest cohort (35-39) realizing a reduction in their retirement savings shortfall (RSS) of 27.1% under auto portability, vs. 17.3% without the auto portability feature.

Also featured in PlanAdviser.

8 things to know about your 401(k) when changing jobs

Bankrate's Dana Dratch offers readers a list of 8 key things to know about their 401(k) accounts when changing jobs. While 401(k) accounts "are designed to be portable" Dratch acknowledges that "moving [a] 401(k) is more challenging" than most realize. Dratch provides a solid overview of participants' options, counsels them against cashing out, and cites Retirement Clearinghouse's 2017 research that indicated more than 30% will take this unfortunate action following a job change.